There are a lot of great reasons to go into private practice. Independence definitely tops the list of pros. But one of the cons of working for yourself is dealing with clients who don’t pay on time or at all.
When you work for someone else, someone else absorbs the hit. When you work for yourself, every late or missed payment represents a bill that you need to pay or a vacation you have to delay.
Making matters even more complicated is the fact that you’re in mental health, and money is inextricably tied to psychology. When a client doesn’t pay, it could indicate a deeper meaning, and needs to be handled carefully to avoid damaging your therapist/client relationship or reversing the progress you’ve made. The client’s attitude toward money also be worth exploring during your therapy sessions.
But, sometimes, people quite honestly forget or life hands them a devastating blow, and they’re unable to pay on time. So, what do you do when that happens?
No matter what, you still deserve to get paid. Here’s how to make sure that you get paid on time every time.
Create a Payment Policy
Start off with a payment policy. You need one for several reasons.
First, you need to be clear about what is and what is not acceptable. With something as important as payment, you can’t afford to have a fluid policy that shifts based on circumstances and who’s asking.
Second, you need to make sure that you communicate your payment policy in clear terms. Your clients should understand what’s expected of them and when.
Third, your office staff also needs to be in the loop. There should be one guideline that the entire office abides by.
You need to create a rock solid payment policy (in writing) that discusses all of those uncomfortable topics you’d prefer to avoid. Topics to tackle include:
What types of payment will you accept?
Do you offer a sliding scale? Under what circumstances?
Do you offer payment plans? Under what circumstances?
What’s considered late? Five days? 30 days?
Will you offer a grace period?
Will you charge interest on late payments?
What will you do if your worst fear becomes a reality and the client doesn’t pay?
Will you charge late fees?
How do you invoice? Do you email or print?
Will you send a reminder email?
Some of these questions don’t need to be part of your public payment policy but do need to be sorted out for you and your staff.
Include Payment Terms on Your Intake Forms
Set expectations once your clients walked through the door. Your client intake forms are the perfect place to explain your payment terms. Include a printable payment policy, and make sure that your clients sign it, too. Then, keep the signed paper as part of your client record.
It’s a good idea to include payment terms on your website as well.
Charge a Deposit
Secure a deposit before the appointment and then apply it toward the total cost of the appointment. This deposit can also turn into the fee attached with late cancellations or no-shows.
Charging a deposit will discourage clients from skipping your service since they’ve already paid for a portion of it.
Image Courtesy of Frisco Psychologist
Offer Discounts for Clients Who Pay Early
A great way to incentivize pre-pay is to offer discounts. By encouraging pre-payment, you won’t be in the unenviable position of having to ask clients to pay after the fact.
A small discount (of 5% or less) may be all it takes to persuade early payment for your services.
Invoice as Quick as Humanly Possible
Don’t wait to settle the bill. Present the invoice while it’s still fresh in their minds.
Ideally, you’ll want to invoice before meeting with them, or at the very least before they leave the office on the day of the appointment.
But, if you’re more lenient, or you’re working with insurance, you may not require immediate payment in full. If so, still make prompt invoicing a part of your bill collection. Send invoices within one business day after services are rendered.
Also, give your clients different options for invoices. Some clients may prefer printed and mailed copies of their bills. Others will opt for email invoices. With TheraNest’s billing software, you can print or send invoices and superbills via email.
Accept Different Payment Options
Remove any roadblocks that could potentially prevent a client from paying you.
The easiest way to do that is by accepting a wide variety of payment types. Cash and debit cards are a given, but do you also accept all credit cards?
Accepting credit cards is a breeze in TheraNest. Use our built-in payment processing to take credit cards over the phone or in person. Combined with a USB card reader, it’s easy to swipe the credit card during the intake process and bypass typos that can happen from user input error.
Remember to make payment as convenient as possible for your clients. In addition to offering multiple ways to pay in office, you can also accept payments online.
Be Willing to Accept Installments
Life happens to all of us. From layoffs to family emergencies that come out of nowhere, your client may fall victim to one of the life’s unexpected circumstances. While this is not an excuse for them to skip out on paying what they owe you, it’s definitely something you need to have a plan for.
Consider setting up an installment plan for clients who can’t pay all at once. If the client needs ongoing therapy, you may be able to set the client on a weekly, recurring payment plan.
Should You Use a Collection Agency?
No one wants to hire a collection agency, but what if it’s been three months or more and the client still hasn’t paid?
While hiring a collection agency may be okay in other industries, it’s a sensitive subject in mental health.
When you use a third party to collect your debts, you have absolutely no idea how they’ll go about it. The process of collecting the debt could end up doing much more harm than good. Plus, you’ll only stand to see, at most, 30% of the debt (more likely 10%). Is it worth it? Probably not. Here’s what you should do instead:
Be Willing to Negotiate
Instead of turning your non-paying client over to a collection agency where you can’t control how they treat your clients, become your own collection agency. In a last ditch effort to collect as much of your payment as possible, you can offer a discount. By giving a discount on an outstanding balance to your client if he or she pays immediately, you increase the chances of settling the debt.
For example, discount the outstanding balance by 25% or even 50%. You may also choose to waive late fees for immediate payment via credit card.
Sure, it’s not ideal, but 50% of what you’re due is better than being left with nothing.
Before you go, here are a few other helpful articles you may want to check out: